TO: Clients & Friends
FROM: Jerry De Córdova, CPA, JD & Miguel Angel Ortiz, CPA
DATE: August 30, 2010
RE: AMNESTY PLAN FOR PERSONAL AND REAL ESTATE PROPERTY TAX
During July 2010, the Governor of Puerto Rico signed Law 71 of 2010 (Law 71) to eliminate one hundred percent (100%) of interest, surcharges, and penalties related to personal and real estate property taxes during an amnesty period of 120 days from August 16 to December 13, 2010. Therefore, all taxpayers who owe taxes on personal property from 2008 and previous years, and on real estate from 2008-2009 and previous years can pay them without interest, surcharges or penalties.
They can also register real estate with the Municipal Revenue Collection Center (CRIM) for appraisal and taxation purposes for a period of less than the five (5) years required by Law 83.
Requirements for amnesty:
A. Personal Property
1. You are current on property tax payments for the year 2009 (current debt).
2. You have filed a property tax return for the year 2009.
3. Certify to CRIM your commitment to pay within the time prescribed by Law 83 the property tax for the year 2010.
4. You have a sworn statement (Form BC-70) from CRIM.
B. Real Estate Property
1. You are current on property tax payments for the year 2009-2010 (current debt) and the first semester of 2010-2011.
2. Certify to CRIM your commitment to pay property tax for the 2010-2011 year.
3. You have a sworn statement (Form BC-70) from CRIM.
4. You have a No Debt Certification for the Special Tax by the Puerto Rico Treasury Department (Law 120) for the 2009-2010 year.
5. You have a water or electric bill (original and one copy) that was issued within the past two (2) months showing the property’s address.
Among the other provisions of Law 71, be aware that property tax returns paid during the amnesty period cannot be amended. Moreover, these payments, which must be made at either CRIM’s central or regional office, may not be subsequently challenged, reinstated, or transferred to another entity or property.
Furthermore, Law 71 exempts property registered with CRIM during the validity of Law 71 from the retroactive tax imposed up to five (5) years from the appraisal date. So only the current year is taxed at the time of the appraisal (Law 83). Commercial or industrial real estate registered according to Law 71 will be exempt from the tax imposed on the fifth, fourth, and third year preceding the appraisal date. It will, however, be taxed for the current year at the time of appraisal and the year immediately previous.
Law 71 also establishes the creation of the Interagency Committee and Development Action Plan for the Registration and Appraisal of Non-appraised Real Estate and Non-appraised Improvements to Commercial and Industrial Property (the Committee). The Committee’s objective, among other matters, is to create a mandatory registry of non-taxed real estate to ensure the implementation of an action plan for the assessment, levy, and collection of property taxes for the years 2010-2011 and 2011-2012.
Law 71 requires the registration of real estate and related improvements within the first seventy-five (75) days after the law goes into effect (August 16, 2010) or until October 30, 2010 (an extension of thirty (30) additional days is available at the discretion of CRIM).
Failure to comply with this registration and identify said property with CRIM during the period from December 13, 2010 (last day of the amnesty period) to June 30, 2012, will result in the imposition of taxes and penalties as follows:
Personal Property
10% of the determined tax as per Law 71
$1,000 fine
Commercial Property
10% of the appraised value
$500 fine
Industrial Property
10% of the appraised value
$250,000 fine
Please advice as soon as possible if we can assist you to benefit from this amnesty. In the meantime, we are available for questions and comments.
Jerry De Córdova, CPA, JD jdecordova@adacpa.com
Miguel Angel Ortiz, CPA mortiz@adacpa.com
The contents of this document are for informational purposes only and do not constitute legal or tax advice. The Puerto Rico Secretary of the Treasury may establish by regulation, circular letter, or other administrative determination of a general nature the necessary standards for the application of the provisions cited in the Laws.